Uranium holding stock shows all signs of significant undervaluation
– By GF value
The Uranium Equity Stock (OTCPK: URPTF, 30 Years Financials) is estimated to be significantly undervalued, according to the GuruFocus Value calculation. GuruFocus Value is GuruFocus’s estimate of the fair value at which the stock should trade. It is calculated based on the historical multiples at which the stock has traded, past growth in business and analysts’ estimates of the company’s future performance. If a stock’s price is significantly above the GF value line, it is overvalued and its future performance is likely to be poor. On the other hand, if it is significantly lower than the GF value line, its future return will probably be higher. At its current price of $ 4.3716 per share and market cap of $ 588.1 million, Uranium Participation is showing all signs of significant undervaluation. The GF value of the uranium participation is shown in the table below.
Since the stake in Uranium is significantly undervalued, the long-term return on its inventory is likely to be much higher than the growth in its business, which has averaged 76.5% over the past five years. years.
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Since investing in companies with low financial strength can result in a permanent loss of capital, investors should carefully consider a company’s financial strength before deciding to buy stocks. Examining the cash-to-debt ratio and interest coverage can give a good initial idea of the financial strength of the business. Uranium Participation has a cash-to-debt ratio of 10,000.00, which ranks better than 99% of companies in the Other Energy Sector. On this basis, GuruFocus ranks the financial strength of Uranium Participation at 7 out of 10, which suggests a fair record. Here is Uranium Participation’s debt and liquidity over the past few years:
Investing in profitable businesses carries less risk, especially in companies that have demonstrated consistent profitability over the long term. Typically, a business with high profit margins offers better performance potential than a business with low profit margins. Uranium Participation has been profitable 3 years in the last 10 years. In the past 12 months, the company achieved sales of $ 1.2 million and earnings of $ 0.14 per share. Its operating margin of -304.33% in the bottom 10% of companies in the industry of other energy sources. Overall, GuruFocus rates Uranium Participation’s profitability as poor. Here are the revenues and net income of Uranium Participation over the past few years:
Growth is probably the most important factor in the valuation of a business. GuruFocus research has shown that growth is strongly correlated with a company’s long-term market performance. A faster growing business creates more shareholder value, especially if the growth is profitable. Uranium Participation’s 3-year average annual revenue growth is 76.5%, which ranks better than 94% of companies in the Other Energy Industry. The 3-year average EBITDA growth rate is 1.7%, which is in the mid-range of companies in the other energy industry.
Another way to determine a company’s profitability is to compare its return on invested capital to the weighted average cost of capital. Return on invested capital (ROIC) measures the extent to which a business generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all of its security holders to finance its assets. When the ROIC is higher than the WACC, it means that the company is creating value for its shareholders. Over the past 12 months, Uranium Participation’s return on invested capital is -0.74 and its cost of capital is 5.15. The ROIC vs WACC historical comparison of uranium stake is shown below:
In short, the stock of Uranium Participation (OTCPK: URPTF, 30-year Financials) appears to be considerably undervalued. The financial situation of the company is fair and its profitability is poor. Its growth is in the mid-range of companies in the other energy sources industry. To find out more about the Uranium Participation share, you can consult its 30-year financial statements here.
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This article first appeared on GuruFocus.